To be clear, the stage was set for this and if you didn’t see the writing on the wall, well then I’m not sure what to tell you. Valuations are stretched the breaking point, political turmoil is mounting with Trump increasing the vitriol on Monday ahead of (another) shutdown deadline, debt limit jitters are back, the bond selloff has everyone worried, positioning is extreme, there are market structure issues that no one knows how to appraise (VIX ETP rebalance risk, the possibility of a systematic unwind), and on, and fucking on.

Although stocks did manage to turn green after a rocky open, losses begin to accelerate in the afternoon. There are innumerable factoids to pull out of Monday’s action, but one obvious point is that the S&P snapped the longest streak in history without a 5% pullback.

“The turn in equities has now turned vicious enough that it has pulled U.S bond yields sharply lower, of which the yen has been the main beneficiary,” Deutsche Bank’s Alan Ruskin said, adding that “equities are so incredibly volatile – both the drop and immediate/current recovery – that tangential markets like FX are struggling to keep up.”

The VIX: parabolic:

“Don’t measure it in percentage terms!”, they’ll shout. But if you did:

Writing about a subject is the best
way to educate yourself about it, and when I flick through past work I remember how much
they taught me, if no one else. Mainly they taught me that I didn’t know very much. But they
also taught me that most other people didn’t know much either. Thus, some key themes
which stand out include the illusory control of policy makers, the presumed knowledge of
those looking to them to actively do good, the ease with which we fool ourselves, and how
best to protect capital in the face of such unavoidable uncertainty. -- Dylan Grice